South Africa: The Frankie's/Woolworths Dispute: The Law Behind It

From time to time disputes regarding intellectual property
rights catch the attention of the public. One such case is the
dispute between Frankie's and Woolworths regarding certain
beverages placed on the market by Woolworths. Media reports are to
the effect that Frankie's approached Woolworths to market its
goods, but that Woolworths, allegedly, turned the request down, and
instead reproduced its own versions of the products. Frankie's
proceeded to lodge a complaint with the Advertising Standards
Authority (ASA).

In its ruling last week, the ASA emphasised that it considered
only the use by Woolworths of "Good old fashioned", and
not the copying of specific flavours, vintage flavours or labels or
shapes. It relied on clause 9 of its Code which determines that an
advertiser should not copy an existing advertisement in a manner
that is recognisable or clearly evokes the existing concept and
which may result in the likely loss of potential advertising value.
The ASA rejected the idea that "old fashioned" is in
general use in relation to sodas. The evidence was accepted that
Woolworths imitated Frankie's advertising. The question was
asked why the particular get-up was copied. It was mentioned that
Woolworths could not explain how they came up with the idea of
using "Old fashioned". The final conclusion was that
Woolworths was involved in intentional copying.

The ruling indicates that the bar for protecting an idea is not
high. An earlier case that supports the current ruling is that in
the MTN case. MTN lodged a complaint with the ASA against an
advertisement of Cell C showing, amongst others, a gardener who
strikes oil in a vegetable patch with a small garden trowel and
immediately uses her cell phone to telephone someone to tell that
person of her good fortune. MTN had a series of advertisements
which "exhibited a distinctive emotive theme, namely that all
\strongly felt personal moments/experiences of a idiosyncratic
nature, or out of the ordinary"' events should be
communicated via their services. An example is a lone man on a golf
course who achieves a hole in one. He looks around but there is
nobody around to share the news with, and the suggestion is that he
should use his cell phone to contact someone with the help of the
service provided by the complainant. The MTN idea, which is of a
relatively rudimentary nature having regard to the product
concerned, was nevertheless held to qualify for protection in terms
of clause 9. The Frankie's case is in line with this
ruling.

A different ground also relied upon by Frankie's was clause
8 of the Code. In terms of clause 8, advertisements may not take
advantage of the advertising goodwill relating to the trade name of
another party. The application of this rule is illustrated well by
the Cresta Shopping Centre case. Here it was said by the
ASA that "Any mark that is made up of common words, albeit
used in a unique combination, runs the risk of competitors using
such words in their common meaning in such a manner to enable it to
identify the competitor." Similarly, in the Discovery
Health ruling, it was said that the word "discovery"
is a "common word to which no one can lay [claim to]
exclusive use. It is only when the word is used in a certain
combination so as to evoke the identity of another party that the
use of the word could become contentious." In the
Frankie's case, this clause might also have been a ground of
relief, and an approach different from the Cresta case might have
been followed. In other words, that there was indeed goodwill
attached to the concept of an old fashioned drink. The identity of
Frankie's product was evoked, and the competitor was
identifiable. The ASA directorate ruled on clause 9 and accordingly
did not need to consider the clause 8 component of the
complaint.

An interesting question is why Frankie's did not approach
the High Court? An application brought to the High Court would
probably have been based on the grounds of unlawful competition,
and also passing-off. Unlawful competition might relate to the
circumstances in which the adoption of Frankie's products were
said to have taken place, as speculated in the media. Our courts
have, on occasion, looked at broader "moral" issues, such
as in the well-known Bress Designs case where a
businessman expressed the desire to destroy a rival by copying a
lounge suite. The court held that, although the copying of the
products as such was legal, the motive of the one party coloured
the conduct unlawful. In the Woolworths matter, it has not been
alleged that they had such a motive and it is clearly not
plausible, however, the principle of a "broad"
perspective is illustrated. On the other hand, in the
Carling decision, it was said that there must inevitably
be manoeuvres, sometimes skilfully conducted, to steal a march on a
competitor. However, this is permitted as it is part and parcel of
our free trade policy. The Carling decision involved the
pre-emption of a competitor's marketing campaign. Here a beer
named Colt 45 was intended for marketing in South Africa and
marketing materials were prepared, strategic studies were done, and
a short trial run was conducted. About a week prior to the
launching of the beer by the appellants, however, the respondent
advertised its intention to market a product to be called Stallion
54. Advertisements were placed in various newspapers and the
product was available at certain liquor stores. The Colt 45 product
was not yet available. Applying this to the Woolworths scenario, it
appears that unlawful competition could have been a difficult cause
of action on which to peg relief.

With regard to passing-off, the visual impact of both products
is very different. Frankie's are colourful and very distinctive
whereas, in contrast, Woolworths' products are more plain, with
only basic product information displayed. In addition, the name
Woolworths appears, of course, on its products, thereby helping to
further distinguish the products. This leaves the copying of the
descriptors. The question is whether there is a likelihood of
confusion arising from the use of a word suggesting an
"old-style" product, combined with a descriptive word. In
other words, for example, "Olde Soft Drink Co - Cinnamon Cola
-The Taste of Yesteryear" versus "Good Old
Fashioned-Cinnamon Cola". In relation to the parties'
ginger beer products, the use of the word "fiery" by both
is fairly unusual, but still has to be read in the above context of
other material being used alongside it. Here, the Sea Harvest
unlawful competition case might be relevant. This matter related to
the use of the words "prime cut" in relation to frozen
fish products. The court held that a "long line of
decisions in passing-off and trade mark cases has established that
where descriptive words, as opposed to invented or fancy words, are
used in a trade name or trade mark, the courts will not easily find
that such words have become distinctive of the business or products
of the person using them, and will not give what amounts to a
monopoly in such words to one trader at the expense of
others." This line of thinking would have counted in
favour of Woolworths.

In summary, from a broader intellectual property perspective,
the matter illustrates once again the complexities of intellectual
property, specifically the view relating to the difficulty of
protecting an idea or concept. It is trite that copyright law does
not protect ideas unless they are in a concrete format. The
registration of a patent is really the only way in which an idea
can be protected in terms of conventional legal rules. However, the
ASA Code does protect ideas. The principle that the ASA seems to
follow is that of not requiring a high degree of inventiveness in
order to allow protection. The Frankie's ruling underlines
this. This is in stark contrast to what might have happened in a
civil matter. Rumours abound about the continued existence of the
ASA. Is there an overlap with the Consumer Protection Act? It is
suggested that a consumer body in a governmental structure would
have been hardpressed to deliver this ruling in a relatively short
period of time. One can only hope the ASA will flourish, and
dispense "Good old fashioned" advertising justice!

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